Credit rating agency Fitch has lowered its rating for Ireland, due to the severe downturn in the Irish economy and what it called an 'exceptional' rise in the Government's debt levels.
Agencies such as Fitch assess the credit risks of countries and companies, and a lower credit rating can make borrowing more expensive for a country. Fitch said it was cutting its rating from AA+ to AA-, having stripped Ireland of its top AAA rating in April.
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Fitch said it expected pressures on the Irish economy to be more severe than in other big economies, because of falling wages, higher unemployment, high household debt levels and further falls in house prices. It also said banks' willingness to lend was likely to remain subdued.
The agency said the scale of the banking crisis in Ireland had 'substantially increased' Ireland's economic risks, saying Government debt including NAMA would rise to 110% of economic output by the end of 2010.
But Fitch said the outlook was stable, indicating that it did not expect to lower Ireland's rating again. Its analyst Douglas Renwick described the Government's response to the problems in the public finances so far as 'impressive'.
